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401 Auto Financing

401 Auto Financing

401 Auto Financing is a subprime auto lender that provides financing options for borrowers with poor credit or other high-risk factors. They have developed a controversial reputation, with many questioning if they are running a legitimate business or taking advantage of vulnerable consumers.

Based in Ontario, 401 Auto Financing offers high-interest loans to applicants with credit scores as low as 500. They advertise being able to get financing for borrowers who have been rejected elsewhere. However, they have very high interest rates ranging from 10% up to 30% APR. There are also many fees and charges associated with their loans.

Online, there are a mix of reviews for 401 Auto Financing. Some praise them for approving loans when no one else would, giving people with bad credit a chance to get a vehicle. However, many others report very negative experiences, calling them “predatory” and questioning their business tactics.

With so much controversy around this subprime lender, it’s important to take a deeper look at 401 Auto Financing to determine if they are running a legitimate operation or if consumers should be very wary of using them.

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Who is 401 Auto Financing?

401 Auto Financing is a subprime auto lender based in Cambridge, Ontario that provides financing to borrowers who may not qualify for traditional auto loans. The company was founded in 1989 and operates as the financing division of 401 Auto, a used car dealership. 401 Auto Financing specializes in offering car loans and leases to applicants with poor credit, no credit, or other risk factors that make it difficult for them to obtain financing from mainstream sources.

As a subprime lender, 401 Auto Financing considers applicants who have credit scores below 600, are recent bankrupts, or are on social assistance. They advertise interest rates ranging from 4% for qualified buyers up to 30% for high risk applicants. 401 Auto Financing requires little or no money down and does not run full credit checks. Instead they assess applicants based on ability to make the monthly payments.

In addition to their Cambridge headquarters, 401 Auto Financing provides financing through over a dozen dealer partners across Ontario. They promote an almost 100% approval rate and streamlined application process that can provide same day approval. The company states that they work with “over a dozen lenders” to provide customized loan terms to applicants of all credit levels.


Are the Reviews Real or Fake?

When assessing the legitimacy of a company like 401 Auto Financing, it’s important to take a close look at online customer reviews. At first glance, 401 Auto Financing has hundreds of 5-star Google reviews praising their service and interest rates. However, on closer inspection, many of these reviews raise red flags:


– The reviews are very generic, with little unique detail about the customer’s experience.

– Many reviews specifically praise the low interest rates, which contradicts 401 Auto’s reputation as a subprime lender charging higher rates.

– There are multiple reviews posted on the same days, suggesting possible batches of fake reviews.

– The accounts posting the reviews have minimal activity outside of the 401 Auto reviews.

– When sorting Google reviews by lowest rating first, real customer complaints emerge about misleading terms and poor car quality.

– Review sites like Trustpilot have much lower average ratings for 401 Auto compared to Google.

– The positive reviews on Google are not consistent with common complaints found on third-party sites.


Overall, while a few genuine positive reviews for 401 Auto likely exist, the pattern suggests a flood of potentially fake 5-star reviews is masking some real issues customers have had. This calls into question the trustworthiness of the company and the legitimacy of the glowing reviews on their own website.


Examining Common Complaints and Controversies

401 Auto Financing has developed a reputation for some concerning business practices that have led many customers to question their legitimacy. Some of the most common complaints and controversies include:


High Interest Rates and Fees

As a subprime lender, 401 Auto Financing offers loans to higher risk borrowers, which means they charge higher interest rates to compensate. Their rates typically range from around 10% on the low end up to 30% for borrowers with the most challenging credit scenarios. In addition to high rates, they also charge origination fees and documentation fees that can add several thousand dollars to the total cost of the loan.


Loan Terms Changing at the Last Minute

Numerous customers have reported that 401 Auto Financing initially approves them for certain loan terms, but then changes the terms to be less favorable right before finalizing the deal. This ‘bait and switch’ practice leaves buyers feeling deceived about the true cost of financing.


Lack of Transparency Upfront

401 Auto Financing has been accused of not providing clear information to buyers early in the process about exact loan terms, interest rates, and total fees. Customers often don’t find out the full details until the final loan documents, making it difficult to accurately compare financing offers.


Vehicle Condition and Advertising Issues

Some buyers claim the vehicles they purchased from 401 Auto Financing were misrepresented in listings and had undisclosed mechanical issues or damage. There are also complaints about false advertising related to vehicle features, mileage, and condition.


Potentially Predatory Lending Tactics

Consumer advocates argue that 401 Auto Financing engages in lending practices that take advantage of buyers with limited financing options. This includes very high rates, inflexible terms, aggressive repossession policies, and targeting vulnerable demographics.


Factors Supporting 401 Auto Financing’s Legitimacy

While 401 Auto Financing has developed a controversial reputation, there are some factors that support their legitimacy as a business:

They are a licensed auto finance company able to legally operate in Canada. 401 Auto Financing has the proper registration and licensing required to provide auto financing in the provinces they serve. This includes licensing from the Financial Services Commission of Ontario (FSCO).

They provide financing options to borrowers unable to obtain loans from mainstream sources. 401 Auto Financing specializes in lending to those with bad credit, on social assistance, or others who cannot get approved for prime rate auto loans. For some borrowers, 401 Auto Financing may be their only option for obtaining necessary transportation.

The company has reasonable explanations for some of the issues raised. For example, 401 Auto Financing states that their higher interest rates and fees simply reflect the higher risk nature of lending to their target demographic. Their rates are comparable to other subprime lenders serving similar customers.

While not perfect, 401 Auto Financing is a registered business filling an important niche in Canada’s auto finance market. They provide a way for higher risk borrowers to access vehicles despite poor credit or other barriers.


Tips for Using 401 Auto Financing

If you do decide to use 401 Auto Financing, here are some tips to make sure you have a smooth experience and avoid potential issues:


Clearly understand all terms and conditions first

Make sure you fully understand the interest rate, fees, loan length, and all other terms before signing anything. Get terms in writing first and read the fine print carefully.


Inspect vehicle thoroughly yourself first

Don’t rely solely on photos or descriptions from 401 Auto Financing. Make time to see the vehicle in person and get a mechanical inspection before finalizing the loan.


Seek alternatives if possible before using as lender of last resort

Consider all options, like financing from other lenders, before going with 401 Auto Financing. Their rates tend to be quite high so only use them if you have no other choices.


Know your rights and protections as a consumer

Understand laws related to financing, false advertising, mechanical fitness etc. Know your options if issues arise post-purchase.


Assessing 401 Auto’s Overall Legitimacy

After reviewing the background, analyzing reviews, examining complaints, and looking at factors on both sides, what conclusion can we draw about whether 401 Auto Financing is running a legitimate business? The evidence presents a mixed picture overall.

On one hand, 401 Auto is a licensed auto finance company operating legally in Canada. They provide a needed service by extending credit to those unable to obtain financing elsewhere. Issues like higher interest rates can be reasonably explained by the higher risk nature of their borrowers. They also respond to consumer complaints and aim to resolve issues.

However, some definite red flags have been raised about concerning practices. Reviews from multiple borrowers allege issues like false advertising, misrepresenting loan terms, and problems with vehicle condition. The pattern of complaints indicates these are not isolated incidents. While some negative reviews are expected, the number and severity here raises concerns.

Overall, the evidence suggests consumers should exercise extreme caution using 401 Auto Financing. While they are a legal business, their practices have rightly been called into question. Those with the ability to explore other options may be better served doing so. But for borrowers unable to obtain credit elsewhere, 401 Auto may be their only recourse. These borrowers should understand the risks involved and know their consumer rights.


Alternatives to 401 Auto Financing

While 401 Auto Financing caters to borrowers with poor credit, they are not the only subprime auto lender in Canada. Here are some other options to consider if you need a bad credit car loan:


Canada Drives

Canada Drives is one of the largest subprime auto lenders in Canada. They work with applicants who have credit scores as low as 500 and have flexible terms. Interest rates start around 10%.


Car Deal Canada

Car Deal Canada partners with a network of special finance dealers across Canada. They work with all credit types but specialize in bad credit loans. Rates vary by dealer but can be as low as 4.99% for borrowers with scores around 600.


Rapid Loans Canada

Rapid Loans Canada provides high risk car loans to borrowers with bankruptcies, consumer proposals, collections and other credit issues. They offer quick approvals and flexible payment options. Interest rates start at 9.99%.


Credit Rebuilders

Credit Rebuilders matches applicants with lenders willing to finance those with poor credit. They work with credit scores as low as 300 and have interest rates starting around 15%.


Auto Credit Canada

Auto Credit Canada specializes in helping Canadians with bad credit get approved for a car loan. They work with over 250 dealerships and can assist with interest rates as low as 4.99% with qualified co-signers.


What to Know About Bad Credit Auto Loans

Bad credit auto loans provide financing options for borrowers with poor or limited credit histories. Lenders that offer these loans understand that not everyone has perfect credit. They are willing to take on higher risk borrowers in exchange for charging higher interest rates and fees.

With a bad credit auto loan, the lender often does not check your credit score or report. Instead, they determine your interest rate based on factors like your income, employment history, and down payment amount. Those with lower incomes or little down payment will get higher rates.

Interest rates on bad credit auto loans typically range from 10% to 36%. The better your other qualifications, the lower your rate will be. You may also get hit with loan origination fees from 1% to 10% of the loan amount.

Bad credit borrowers are often required to put 10% to 20% down on the car purchase. Your loan amount and term will be limited too, often to 36 months or less. However, this can help ensure you don’t end up overextended.

When shopping for bad credit financing, compare all terms from multiple lenders first. Make sure you understand the full costs. Avoid dealers who won’t disclose specific rates and fees upfront.

While bad credit auto loans make financing possible, the high costs mean they should only be used as a last resort. Taking steps to improve your credit first can open up more affordable financing options.


Signs of an Auto Loan Scam

Unfortunately, some unscrupulous lenders take advantage of those with poor credit. Here are some common tactics used by auto loan scammers to watch out for:


Bait and Switch

A dealer or lender may advertise an amazing low rate to get you in the door, but then claim you don’t qualify once you apply. They’ll try to switch you to a much higher rate loan.


“Spot Delivery”

Scammers will let you drive the car home immediately without final loan approval. But days later they’ll call and claim your loan was denied, forcing you to return the car or accept a higher rate.


Packed Payments

Shady lenders will sneak in extra fees and products (extended warranties, etc) without your consent, jacking up your monthly payment.


Yo-Yo Financing

Similar to spot delivery, you drive the car home only to be told the financing fell through. They leverage this to get you to accept a higher interest rate.


Title Washing

Sellers alter a car’s title to hide issues or make mileage appear lower, increasing its value. Only a Carfax report reveals the true history.


Getting the Best Deal with Bad Credit

If you have bad credit, finding affordable auto financing can be challenging but there are some strategies that can help improve your chances of getting approved and securing the lowest rate possible:


Shop Around Extensively

Don’t just apply with the first lender you find. Take the time to thoroughly research and apply with multiple subprime lenders and compare all the loan offers. Rates, terms, fees etc can vary significantly so it pays to cast a wide net.


Get Pre-Approved First

Before you start shopping for a specific vehicle, try to get pre-approved for financing. This gives you a better idea of what you can realistically afford and improves your negotiating position with the dealer.


Consider a Co-Signer

Adding a cosigner with good credit can help you qualify for better rates. Just make sure the co-signer understands they are equally liable for repaying the loan.


Make a Larger Down Payment

The more you can put down upfront, the lower your monthly payments will be. Even a few thousand dollars down can make a difference in your interest rate.


Choose an Older Used Car

Opting for an older, low-cost used car instead of a newer model can reduce the amount you need to finance and potentially improve the loan terms.


Repair Your Credit

If possible, take some time to pay down debts, dispute any errors on your credit report and demonstrate responsible credit management. Even marginal credit improvement can expand your financing options.


Negotiate the Best Deal

Don’t be afraid to negotiate the purchase price, interest rate, fees and other terms of your loan. Being a savvy negotiator can help lower your costs.


Read All Paperwork Carefully

Scrutinize the final contract and make sure it reflects everything you agreed to verbally. Watch for any hidden fees or changes to the terms.


Improving Your Credit to Get Better Rates

If your credit score is poor, taking steps to improve it can help you qualify for lower interest rates on an auto loan in the future. Here are some tips for boosting your credit score over time:


– Pay all your bills on time – payment history is the biggest factor in your credit score. Set up automatic payments or reminders to avoid missed payments.

– Pay down credit card balances – high balances relative to your limit hurt your credit utilization rate. Try to keep balances below 30% of your credit limit.

– Limit new credit applications – applying for a lot of new credit at once can lower your score. Only apply for what you need.

– Correct errors on your credit report – mistakes on your report can unfairly lower your score. Dispute any errors you find with the credit bureaus.

– Become an authorized user – you can benefit from another person’s good credit history. Ask to be added as an authorized user on a spouse or family member’s credit card.

– Monitor your credit – check your credit reports from all three bureaus annually and monitor your score. This helps you catch issues early.


With a higher credit score, you can qualify for the best rates from lenders like your bank or credit union. Improving your credit takes time, but following these tips can help you get there.


When to Use 401 Auto Financing

401 Auto Financing can be a good option for certain types of borrowers who are unable to get approved for financing from mainstream sources. Here are some examples of who 401 Auto Financing may work for:


Borrowers with poor credit: 401 Auto specializes in lending to those with bad credit or credit challenges. They advertise approving borrowers with credit scores as low as 300. So if you have bad credit due to issues like past defaults, bankruptcies, collections etc., 401 Auto may be able to assist.


First-time borrowers: If you have limited credit history and are trying to get your first car loan, 401 Auto is an option. Mainstream lenders often won’t approve first-time borrowers, while 401 Auto seems more open to it.


Recent immigrants: As a new Canadian without an established local credit file, it can be very difficult getting approved for a car loan from a bank or dealership. 401 Auto advertises helping newcomers to Canada get driving, so they may offer loans to recent immigrants.


Self-employed: Proving income can be an obstacle to financing when self-employed or a contract worker. 401 Auto claims to work with those who are self-employed to get flexible approvals.


On disability assistance: Being on ODSP or other disability income assistance programs can make getting a car loan approval challenging. 401 Auto says they work with those on disability income to provide financing options.


Previously bankrupt: If you declared bankruptcy in the recent past, most mainstream lenders will automatically decline you. 401 Auto seems to look at applicants individually and may offer financing to borrowers who have recently been discharged from bankruptcy.


In consumer proposal: If you are currently in an active consumer proposal, it can be very difficult to get approved for additional credit like a car loan. 401 Auto advertises approving borrowers who are still making payments under a proposal.


The key is that 401 Auto Financing fills a lending niche, providing car loans to those who may not qualify through traditional lenders. For borrowers with credit challenges, they may be one of the few options. However, it likely comes with higher rates and fees.



After analyzing the various factors regarding 401 Auto Financing, it appears they are operating a legitimate business despite the controversies. While their interest rates and fees are quite high compared to mainstream lenders, this reflects the increased risk they take on by financing applicants with poor credit. The company is licensed to operate in Canada and does address customer complaints, indicating a reasonable level of accountability.

However, consumers should still exercise caution when using 401 Auto Financing. Their financing terms can change at the last minute, so it’s essential to get all details in writing first and read the fine print. Applicants should also thoroughly inspect any vehicle themselves rather than relying on 401 Auto’s descriptions, and try to secure alternative financing if possible before resorting to 401’s higher rates. While 401 Auto Financing fills a need for those unable to obtain credit elsewhere, consumers should understand the risks and proceed carefully.

In summary, 401 Auto Financing appears to conduct legal and aboveboard business operations despite valid consumer concerns. Individuals with poor credit should weigh the benefits and drawbacks carefully before accepting one of their high-interest auto loans.

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Questions About 401 Auto Financing

401 auto financing is a legitimate auto financing company that operates in Canada. They have been accredited by the Better Business Bureau since 2018 and currently hold an A+ rating. 401 auto financing specializes in providing auto loans to customers with bad credit or no credit history. They work with a network of dealerships across Canada to provide financing options for both new and used vehicles. Based on customer reviews and BBB rating, 401 auto financing does seem to be a legitimate lender that provides real financing solutions, making them worth considering if you have poor credit and need a car loan.

401 auto financing offers financing for both new and used vehicles from their dealership partners across Canada. This includes sedans, trucks, SUVs, crossovers, minivans, and more from a variety of automakers. As long as the vehicle is listed in a 401 auto financing dealership inventory, they can provide a loan for it. They work with dealerships that sell models from manufacturers like Ford, Honda, Toyota, Nissan, Hyundai, Kia, Dodge, Chrysler, Chevrolet, GMC, Buick and others. So they provide a wide selection of vehicle makes and models to choose from when seeking financing through them.

The minimum credit score needed for 401 auto financing approval is 500. They specialize in providing auto loans to subprime borrowers who have poor credit or no established credit history. Whether you have missed payments, defaults, bankruptcies or other issues impacting your score, you can still potentially qualify for financing through 401 auto financing. While interest rates may be higher due to poor credit, they work to help consumers in this situation get approved for the vehicles they need.

Yes, 401 auto financing does work with customers to provide $0 down payment auto financing options in many cases. While each application is evaluated based on the applicant’s unique credit profile and financial situation, they have lending partners that offer no money down car loans to consumers with bad credit. This makes vehicle ownership more accessible for those who cannot afford a large down payment. Of course, not putting money down does mean your monthly payments will be higher over the loan term.

Interest rates with 401 auto financing typically range between 10% and 30% APR for approved applicants. The exact rate you qualify for will depend on factors like your credit score, income, existing debt levels and the vehicle you select. Applicants with very poor credit scores generally receive interest rates on the higher end of their range. Putting some money down as a down payment can help lower your rate as well. 401 auto financing interest rates are higher than traditional lenders due to catering to high risk, subprime borrowers. But they allow consumers to get approved and on the road.

Yes, making your monthly payments on time with a 401 auto financing loan can help to rebuild and improve your credit over time. Since they report your payment history to the credit bureaus each month, staying current on your auto loan helps demonstrate you are now a responsible borrower able to handle this new debt obligation. Just be sure to make at least the minimum required monthly payment by the due date every month. After a year or more of consistent on-time payments, you may be able to refinance to a lower rate.

Documents required when applying for an auto loan with 401 auto financing include:


– Proof of income – Recent pay stubs, tax returns, disability award letters or other documentation of income.


– Government-issued photo ID – Such as a valid Canadian driver’s license.


– Proof of address – Such as a utility bill or bank statement with your name and current residential address.


– Down payment funds – If you are making a down payment, provide bank statements showing funds available.


Having these documents ready when you apply helps speed up the review and approval process. 401 auto financing may ask for additional documents from some applicants depending on their unique situation.

The approval process with 401 auto financing can be very fast in most cases. Many applicants receive an initial decision in just minutes after submitting an online application. If approved, signing final loan documents electronically can also be done quickly to secure your financing rate and terms. Overall it typically takes 1-3 days to go from application to final approval with 401 auto financing when providing required proof documentation promptly. Fast approvals allow you to efficiently move forward with purchasing your vehicle.

401 auto financing works with dealer partners in the following Canadian provinces currently:


– Ontario

– Quebec

– Nova Scotia

– New Brunswick


So applicants in these regions of Canada will find dealership options to select their desired vehicles from and then apply for 401 auto financing loan approval. As their dealership network expands to additional provinces, they are making vehicle financing more widely accessible for subprime borrowers across different parts of Canada.

401 Auto Financing has partnership agreements in place with a network of independent used car dealerships across Canada. While each dealership sells their own inventory of vehicle makes and models, they allow customers to utilize 401 Auto Financing lending services to gain financing approval. Upon applying and getting matched with a lender, you select the specific dealership that has the vehicle you want. This dealership then handles completing purchase paperwork using the 401 financing. So it combines the vehicle inventory and purchasing process of local dealerships with 401’s lending services.


Yes, failing to make payments on a 401 auto financing loan as agreed can result in car repossession. When you take out an auto loan, the lender maintains a security interest in the financed vehicle serving as collateral until the loan balance is fully repaid. If you go into default from missed payments, 401 auto financing can legally take possession of the vehicle through third party repossession companies. To avoid repossession, be sure to make at least minimum monthly payments or contact the lender immediately if you anticipate having trouble making payments.

Typical fees charged on 401 auto financing loans in Canada include:


– Origination fee – Can range from 0% to 10% of loan amount

– Doc prep fees – Around $300

– Lien registration fee – $125 in most cases

– GPS tracking fee – $499+GST on approved loans

– Monthly PPSA fee – $59.99+GST in most provinces


Keep in mind that provincial sales taxes also apply on top of the above fees where required by law. Overall costs are still competitive for high risk borrowers needing bad credit auto financing in Canada.

401 Auto Financing offers loan terms from 12 to 72 months for approved Canadian applicants. This provides both short term and long term financing options to choose from to meet different consumer needs and budgets. The maximum loan amount they offer is generally $150,000 CAD. So while focused on subprime lending, loan size should accommodate even higher priced new and used vehicle purchases for buyers with bad credit.

Borrowers typically need to wait 12 months before upgrading or trading in their vehicle financed through 401 auto financing in Canada. This allows sufficient time to build equity in the vehicle to roll over into the next loan. While 401 auto financing specializes in financing for first time buyers or those rebuilding credit, they want to see you manage your initial loan responsibly before getting you qualified for an upgrade to your next vehicle.

If an account becomes delinquent, 401 Auto Financing attempts to work with borrowers to find solutions and become current on payments whenever possible. However, after 60 days past due, they do assign accounts to a professional collection agency. At 90+ days past due, they reserve right to pursue vehicle repossession with the help of a repossession company. Collection calls, letters, potential legal action, and credit reporting of delinquency can also occur. Avoid these outcomes by staying current on your loan or communicating with the lender early if struggling.

401 auto financing invites customers to leave reviews on their website at Third party review sites like Google, Facebook, TrustPilot, and BBB also contain 401 auto financing reviews from past applicants regarding their loan experience. These provide firsthand customer feedback, with most reviews being positive overall about interest rates received and customer service. There are some negative reviews posted regarding higher payments, issues with vehicles, or collection procedures. But most complaints appear resolved professionally by the 401 auto financing team based on responses.

You can contact 401 Auto Financing customer service at:


Phone: 1 (877) 401-3423



Their Canadian-based customer service team is available during business hours to assist with any questions or concerns regarding your auto loan, payments due dates, documents needed, and any other issues. Contact them promptly if you ever experience problems making payments on time or other difficulties to prevent default.

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